Ashok Kumar Mahnot

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.11.00 Crs. of Ashok Kumar Mahnot

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Cash Credit - Sanctioned	05.00	Long Term	BWR B + (Stable)
Sub Total	05.00
Non-Fund Based
Bank Guarantee - Sanctioned	06.00	Long Term	BWR B + (Stable)
Sub-Limit (Counter Bank Guarantee- One Time) - Sanctioned	(03.95)	Short Term	BWR A4
Sub Total	06.00
Grand Total	11.00	(Rupees Eleven Crores Only)

*Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank facilities are provided in Annexure-I RATING ACTION / OUTLOOK : Stable

BWR has assigned the long term rating at “BWR B+'' and short term rating at “BWR A4'' with “Stable” outlook for the bank loan facilities of Ashok Kumar Mahnot .The rating draws strength from the experienced partners of the firm indulged in the construction line of activity . However, the rating is constrained on account of average financial risk profile and competition in the industry.

The rating outlook has been assigned as "Stable" as BWR believes that Ashok Kumar Mahnot  business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term. The rating outlook may be revised to 'Positive' in case the current ratio and profit margins show sustained improvement. The rating outlook may be revised to 'Negative' if the financial risk profile goes down.

KEY RATING DRIVERS

Credit Strengths:

• Management Experience :

  The directors/ partners are well experienced and qualified having more than 25 years of experience in the construction line of activity. The company is in existence for 39 years.

Credit Risks:

• Average Financial Risk Profile :

  Though company's revenue from operations has grown substantially by 68.26 % to Rs.31.37crs in the FY19, but current ratio of 0.24 indicates inadequate liquidity position. There has been a negative Conversion Cycle of 31 days due to high days payable of 34 days in FY19.

• Competition in the Industry :

  Entry barriers in the industry are low on account of limited capital and technology requirement leading to intense competition and limiting the pricing power resulting in low profitability. Also, firm works on the tender based contracts from the government which includes large number of contractors leading to intense competition.

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA

For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Going forward, the ability of the firm to improve its financial risk profile and maintaining adequate liquidity will remain the key rating sensitivities.

Positive: The rating may be upgraded if the company interalia, is able to improve its topline and generate profits, improve its current ratio, or on account of any other favourable factor.

Negative: The rating may be downgraded if inter alia, there is any deterioration in financial risk profile, fails to maintain adequate liquidity or on account of any unforeseen unfavourable events.

LIQUIDITY POSITION

Stretched 

The company had cash and cash equivalents balance of Rs.0.30 crs as on 31.03.2019. Current ratio stood at 0.24x as on 31.03.2019. The company had outstanding long term loans of Rs.0.07crs (auto loan) from NBFC and Equipment loan of Rs.0.07crs from Canara Bank as on 31.03.2019 against long term liabilities of 0.32crs. Cash Flow Statement for FY19 was not available. The company had ISCR and DSCR of 3.24x and 3.06x in FY19.There is around 60.33% average limit utilization of CC limit for the last six months i.e. from Jan 2020 to June 2020. Negative Conversion Cycle of 31 days due to high days payable of 34 days in FY19 is reported. 

Firm is having one of the group concerns named as M/s AKM Marble & Granite LLP. Advance of Rs.5.85 Lacs was made against the purchase of Granite from group company by the firm in FY19.

PROFILE

M/s Ashok Kumar Mahnot is a partnership firm having its registered office at Plot No. 17 and 18, Jeevandeep Colony, Khoda Ganesh Ji Road, Kishangarh, Rajasthan-305801. The said firm is a AA class certified govt. contractor from the Rajasthan Housing Board. The said firm has been registered since 01.09.1981. However, it was incorporated with MCA as limited liability partnership on 28.03.2017. Mr. Ashok Kumar Mahnot, Mrs. Kalpana Mahnot, Mrs. Indra Mahnot are the said partners to the firm. All the key managerial decisions are taken by Mr. Ashok Kumar Mahnot. He has a experience of more than 25 years in this line of activity in completion of various projects. The said firm is into the civil and building construction work assigned by various government departments which includes Rajasthan Housing Board, PWD. Medical & Health, RUDSICO etc. As provided by the management, firm has outstanding orders in hand amounting to Rs.16.37crs which is expected to be completed in the coming months. Firm has no outstanding ratings with other CRA.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 18-19 (Audited)	FY 17-18 (Audited)
Operating Revenue	Rs.Crs.	31.37	18.65
EBITDA	Rs.Crs.	2.41	1.59
PAT	Rs.Crs.	1.48	0.82
Tangible Net Worth	Rs.Crs.	6.24	4.42
Total Debt/Tangible Net Worth	Times	0.43	0.61
Current Ratio	Times	0.24	0.69

KEY COVENANTS OF THE INSTRUMENT/FACILITY RATED

N.A

RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)

S.No	Current Rating (2020)				Rating History
	Facilities	Tenure	Amount (Rs.Crs)	Rating	2019	2018	2017
Fund Based
1	Cash Credit - Sanctioned	Long Term	05.00	BWR B+ (Stable)	NA	NA	NA
Non-Fund Based
2	Bank Guarantee - Sanctioned	Long Term	06.00	BWR B+ (Stable)	NA	NA	NA
3	Sub-Limit (Counter Bank Guarantee- One Time) - Sanctioned	Short Term	(03.95)	BWR A4	NA	NA	NA
Total			11.00	(Rupees Eleven Crores Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS

BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.

Hyperlink/Reference to applicable Criteria :

• General Criteria
• Approach to Financial Ratios
• Infrastructure Sector

For More Information Contact:

Analytical Contacts	Investor Contacts
Kartik Mahesh Ruia Lead Analyst kartik.r@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
V.K.Kukreja Associate Director - Ratings B : +91 11 2341 2232 kukreja.vk@brickworkratings.com
1-860-425-2742

SL.No.	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Cash Credit - Sanctioned	5.00	_	5.00
2	Bank Guarantee - Sanctioned	6.00	_	6.00
Sub-Limit (Counter Bank Guarantee- One Time) - Sanctioned		(3.95)
Total				11.00
TOTAL (Rupees Eleven Crores Only)